In this subtitle, “perpetual care”:
means the maintenance, including the cutting of grass abutting memorials or monuments, administration, supervision, and embellishment of a cemetery and its grounds, roads, and paths; and
includes the repair and renewal of buildings, including columbaria and mausoleums, and the property of the cemetery.
This subtitle does not apply to a cemetery that:
has less than 1 acre available for burial; or
is owned and operated by:
a county;
a municipal corporation;
a church;
a synagogue;
a religious organization;
a nonprofit organization created before 1900 by an act of the General Assembly;
a family and does not conduct public sales; or
a State veterans agency.
This subtitle does not apply to the sale of a below–ground earth–covered chamber.
This subtitle does not amend a trust agreement covering a perpetual care fund that existed on or before July 1, 1973, except as to:
the appointment of a successor trustee or cotrustee;
deposits into the fund after July 1, 1973; and
the withdrawal from the fund of income on deposits made after July 1, 1973.
In this section, “developed land area” means land in a cemetery:
that is available for burial;
where roads, paths, or buildings have been laid out or built; or
where burial lots have been outlined on a plat or in a record or sales brochure.
Each sole proprietor registered cemeterian, permit holder, or any other person subject to the registration or permit provisions of this title who sells or offers to sell to the public a burial lot or burial right in a cemetery as to which perpetual care is stated or implied shall have a perpetual care trust fund.
A separate perpetual care trust fund shall be established for each cemetery to which this section applies.
On the general price list, contract of sale of burial space, and any conveyance documents, all cemeteries subject to the provisions of this subtitle shall state in writing the following using 12 point or larger type font:
“The cemetery is a perpetual care cemetery.”; or
“The cemetery is not a perpetual care cemetery.”
A cemetery created in the State after October 1, 2001, that is not exempt under § 5–602 of this subtitle shall be required to establish a perpetual care trust fund.
Each sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle initially shall deposit in the perpetual care trust fund at least:
$10,000, if the developed land area of the cemetery is 10 acres or less and the cemetery is a nonprofit cemetery which does not sell burial goods;
$25,000, if the developed land area of the cemetery is more than 10 acres and the cemetery is a nonprofit cemetery which does not sell burial goods;
$25,000, if the developed land area of the cemetery is 10 acres or less and the cemetery is a for–profit cemetery or a nonprofit cemetery which sells burial goods; or
$50,000, if the developed land area of the cemetery is more than 10 acres and the cemetery is a for–profit cemetery or a nonprofit cemetery which sells burial goods.
The deposits required by this subsection are in addition to the deposits required by subsection (c) of this section.
Except as provided in paragraph (4) of this subsection, within 30 days after the end of the month when the buyer of a right of interment in a burial lot, above–ground crypt, or niche makes a final payment, the registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle shall pay in cash to the trustee for deposit in the perpetual care trust fund:
at least 10% of the actual selling price of each right of interment in a burial lot, above–ground crypt, or niche; or
if the burial space is sold at a discount or at no cost, at least 10% of the imputed cost of the fair retail value.
The amount of deposit to the perpetual care trust fund shall be deducted from the proceeds of the listed selling price of the right of interment in a burial lot, above–ground crypt, or niche, and may not be charged as an add–on to the purchaser.
This subsection does not apply to the sale of a second right of interment or the resale of a right of interment in a burial lot, above–ground crypt, or niche for which the cemetery already has paid into the perpetual care trust fund the deposit required by this subsection.
A distribution from the perpetual care trust fund made under subsection (g) of this section:
shall be used only for the perpetual care of the cemetery, including:
the maintenance, including the cutting of grass abutting memorials or monuments, administration, supervision, and embellishment of the cemetery and its grounds, roads, and paths; and
the repair and renewal of buildings, including columbaria and mausoleums, and the property of the cemetery;
may not be used to care for memorials or monuments; and
may not be used by the owner of a cemetery for any purpose not described in item (1) of this subsection.
Realized capital gains of a perpetual care trust fund shall be deposited in the perpetual care trust fund as principal of the perpetual care trust fund.
In this subsection, “net income” includes interest and dividends.
A cemetery that is subject to this section may select as the method of distribution from the perpetual care trust fund either:
all net income to be distributed on a monthly, quarterly, semiannual, or annual basis; or
an amount not exceeding 4% of the average of the end–of–year fair market value of the perpetual care trust fund for the preceding 3 calendar years, to be distributed on a monthly, quarterly, semiannual, or annual basis.
Subject to subparagraph (ii) of this paragraph, if a cemetery that is subject to this section selects a method of distribution described in paragraph (2) of this subsection:
the trustee shall submit to the Director a statement attesting that the cemetery’s selection of the method of distribution described in paragraph (2) of this subsection is reasonably expected to result in sufficient protection of the perpetual care trust fund’s principal;
the cemetery shall notify the Director in writing at least 60 days before the date the method of distribution will take effect;
the notification under item 1 of this subparagraph shall include a copy of the investment policy statement for the trust and the planned initial distribution amount;
the cemetery shall notify the trustee in writing at least 60 days before the date the method of distribution will take effect; and
the method of distribution shall remain in effect until the cemetery notifies the trustee and the Director in writing that the cemetery has selected a different method of distribution.
A cemetery’s selection of a method of distribution under subparagraph (i) of this paragraph is contingent on approval of the Director made in accordance with subsubparagraph 2 of this subparagraph.
Within 30 days after receiving notice under subparagraph (i)1 of this paragraph, the Director shall, in a written notice provided to the cemetery, approve or disapprove the proposed distribution method.
If a cemetery that is subject to this section does not select a method of distribution described in paragraph (2) of this subsection, the trustee shall distribute to the cemetery, on a monthly basis, all net income of the perpetual care trust fund.
If a cemetery that is subject to this section selects the method of distribution described in paragraph (2)(ii) of this subsection, the trustee:
shall submit annually to the Director a statement attesting that the cemetery’s selection of the method of distribution described in paragraph (2)(ii) of this subsection is reasonably expected to result in sufficient protection of the perpetual care trust fund’s principal;
may not reduce the amount of the distribution by any taxes or fees;
shall adopt an investment policy that:
provides for a balanced portfolio, including a reasonable amount of fixed–income securities; and
supports the growth of the perpetual care trust fund; and
shall use the method of distribution selected by the cemetery if the fair market value of the perpetual care trust fund exceeds the sum of:
80% of the average of the end–of–year fair market value of the perpetual care trust fund for the preceding 3 calendar years; and
the total contributions made to the principal of the perpetual care trust fund from the end of the preceding calendar year; or
shall distribute to the cemetery on a monthly basis for the remainder of the calendar year all net income of the perpetual care trust fund if the fair market value of the perpetual care trust fund does not exceed the sum calculated under item 1 of this item.
The Director may limit or prohibit a distribution made under paragraph (2)(ii) of this subsection if the Director believes that:
based on a review submitted by the trustee of the prior 5 to 7 years of performance of the perpetual care trust fund or, if less than 5 years have elapsed since the date of selection of the investment method, a review submitted by the trustee of the performance of the perpetual care trust fund since the date of selection, investment returns and distribution practices have not resulted in sufficient protection of the perpetual care trust fund’s principal; or
the trustee does not have sufficient knowledge and expertise to administer the perpetual care trust fund in a manner that supports the growth of the perpetual care trust fund.
The trustee shall pay capital gains taxes from the principal of the perpetual care trust fund.
The perpetual care trust fund authorized by this subsection shall be a single purpose trust fund.
In the event of the bankruptcy or insolvency of, or assignment for the benefit of creditors by, or an adverse judgment against the sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle, the perpetual care trust funds may not be made available to any creditor as assets of the sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle or as payment for any expenses of any bankruptcy or similar proceedings, but shall be retained intact to provide for the future maintenance of the cemetery.
The perpetual care trust fund is not subject to judgment, execution, garnishment, attachment, or other seizure by process in bankruptcy or otherwise, or to sale, pledge, mortgage, or other alienation and is not assignable.
A sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle shall maintain in the office of the cemetery a copy of the most recent trust report filed with the Office under § 5–606 of this subtitle and shall make the report available for inspection by an owner or a prospective purchaser of a right of interment in a burial lot, above–ground crypt, or niche.
A trustee appointed under this subtitle must be:
a national banking association;
a bank, as defined in the Maryland Uniform Fiduciaries Act;
a savings bank insured by a unit of the federal government;
a savings and loan association insured by a unit of the federal government; or
a person who annually provides, with the trust report, the proof of a fidelity bond that meets the requirements of subsection (b) of this section from a recognized bonding institution authorized to do business in the State in an amount equal to the trust fund.
The fidelity bond provided under subsection (a)(5) of this section shall be:
for the benefit of the trust account of the cemetery or its burial space owners or both;
conditioned such that the applicant shall comply with all Maryland laws and regulations relating to trust accounts; and
subject to the approval of the Director.
A trustee may not use any perpetual care trust funds required to be held in trust in accordance with this subtitle to:
purchase an interest in any contract or agreement to which the registrant, permit holder, or any other person subject to the trust requirements of this subtitle, or any entity owned or under the control of a registrant, permit holder, or any other person subject to the trust requirements of this subtitle, or a spouse, child, parent, or sibling of a registrant or any other person subject to the trust requirements of this subtitle is a party; or
make any loan or direct or indirect investment of any kind:
to any registrant, permit holder, or any other person subject to the trust requirements of this subtitle or to any spouse, child, parent, or sibling of a registrant or any other person subject to the trust requirements of this subtitle;
to or in any entity or business operations owned or under the control of a registrant, permit holder, or any other person subject to the trust requirements of this subtitle, or a spouse, child, parent, or sibling of a registrant or any other person subject to the trust requirements of this subtitle;
on or in any real property of a cemetery, or the buildings or structures appurtenant to the property; or
in any permanent improvements of a cemetery or its facilities.
The terms of a trust to provide for perpetual care shall be designated in a written agreement between the registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle and trustee.
The terms of the trust agreement:
shall conform to this subtitle; and
may include provisions about:
payment of income;
accumulation of income;
reinvestment of income;
administration of the trust fund; and
powers of the trustee as to investments.
A trust agreement shall be irrevocable.
However, a trust agreement may:
give the registered cemeterian, permit holder, or other person subject to the trust requirements of this subtitle the right to remove the trustee and appoint another qualified trustee; and
provide for the appointment of individuals as cotrustees and successor cotrustees with a corporate trustee.
Each sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle shall keep detailed records of all sales of burial lots or burial rights in a cemetery and money received.
The records of each sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle and of each trustee appointed by the sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle are subject to examination by:
the Director;
the Attorney General or an authorized representative of the Attorney General; and
the State’s Attorney for the county where the cemetery owner does business or where the cemetery is located.
Each sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle shall submit a report to the Director within 150 days after the close of each calendar or other fiscal year chosen by the sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle.
The report shall:
be on the form that the Director requires;
be certified as to correctness by a certified public accountant retained by the cemetery;
be accompanied by a trustee’s annual summary statement of assets for the reporting period that includes:
the amount of money in the perpetual care trust fund at the beginning of the reporting period;
an investment portfolio summary describing the asset and the market value for each investment class;
a transaction summary of the perpetual care trust fund containing:
trust account earnings, including interest, dividends, and realized gains or losses;
money deposited;
total receipts;
administrative expenses;
disbursements of income for cemetery care, maintenance, administration, and embellishment;
other disbursements; and
total disbursements; and
the amount of money in the perpetual care trust fund at the end of the reporting period;
be accompanied by a fee of $25; and
include:
the name of the sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle;
each location of the sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle;
the amount of money in each perpetual care trust fund at the beginning of the calendar or other fiscal year chosen by the sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle;
the amount of money that the sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle received during that year that is subject to the trust requirements of this subtitle;
the amount of money actually deposited into each perpetual care trust fund in that year;
the amount of money spent during that year to provide care, maintenance, administration, and embellishment of each cemetery, except for money used for the care of monuments and memorials; and
the name and address of each trustee.
If the Director determines, after a review of the report and annual summary statement of assets required by this subsection, that additional documentation is required, a sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle shall provide the additional documentation to the Director.
A sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle who stops selling burial lots or burial rights in a cemetery as to which perpetual care is stated or implied shall notify the Director in the required report for the year in which sales stop.
The Director may require a sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle to correct any underfunding, including interest, due to the perpetual care trust fund.
The Director may adopt regulations:
to administer subsection (b) of this section; and
for determining whether registered cemeterians, permit holders, or any other person subject to the trust requirements of this subtitle are complying with this subtitle.
If the Director finds that a registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle has violated this subtitle or a regulation adopted under this subtitle, the Director may refer the matter to:
the Attorney General for civil enforcement; or
the appropriate State’s Attorney for criminal prosecution.
The Attorney General may sue for and a court may grant:
injunctive or other equitable relief;
imposition of a civil penalty not exceeding $5,000; or
both.
A registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle may not sell or offer to sell to a member of the public a burial lot or burial right in a cemetery and represent to the public in any way, express or implied, that the cemetery or the burial lot or burial right in the cemetery will have perpetual care unless the sole proprietor registered cemeterian, permit holder, or any other person subject to the trust requirements of this subtitle has provided adequately for that perpetual care.
Except as provided in § 5–602 of this subtitle, a sole proprietor registered cemeterian, permit holder, or any other person subject to the permit or registration requirements of this title may not establish, operate, or allow a cemetery to be operated in violation of this subtitle.
Except as otherwise provided in subsection (c) of this section, a sole proprietor registered cemeterian, permit holder, or any other person subject to the permit or registration requirements of this title who violates this subtitle is guilty of a misdemeanor and, on conviction, is subject to:
for a first violation, a fine not exceeding $5,000 or imprisonment not exceeding 1 year or both;
for a second violation, a fine not exceeding $10,000 or imprisonment not exceeding 2 years or both; and
for a third or subsequent violation, a fine not exceeding $20,000 or imprisonment not exceeding 3 years or both.
Except as otherwise provided in subsection (c) of this section, if a corporation violates this subtitle, each officer responsible for the violation is guilty of a misdemeanor and, on conviction, is subject to:
for a first violation, a fine not exceeding $5,000 or imprisonment not exceeding 1 year or both;
for a second violation, a fine not exceeding $10,000 or imprisonment not exceeding 2 years or both; and
for a third or subsequent violation, a fine not exceeding $20,000 or imprisonment not exceeding 3 years or both.
A person who willfully misappropriates or intentionally and fraudulently converts perpetual care trust funds in excess of $100 to that person’s own use is guilty of a felony and, on conviction, is subject to a fine not exceeding $25,000 or imprisonment not exceeding 10 years or both.